The long road to recovering stolen assets… made more navigable

The recent upheavals in the Middle East, North Africa and elsewhere have put asset recovery in the spotlight. Indeed, as the citizens of these countries look towards the future, recovering wealth that former public officials are alleged to have acquired illegally remains a main concern.

But as their asset recovery practitioners will soon find out, it is by no means a straightforward process. Corruption, which is estimated to cost the world’s poorest people as much as $40 billion per year, is often a difficult offense to prove. Jurisdictions where these funds are deposited require proof of an offense or a nexus to criminal activity before the assets can be returned to the jurisdiction from which they were stolen.

To help explain why it can be so difficult to recover money that has been lost through corruption, my colleagues and I at the StAR Initiative – a partnership of the World Bank Group and the United Nations Office on Drugs and Crime – consulted with over 50 international asset recovery practitioners to identify the Barriers to Asset Recovery. We found several key obstacles that make it difficult to trace, freeze, recover and return assets lost to corruption and other related offenses:

• Asset recovery is a complex process. The legal tools and procedures used by jurisdictions are not all the same. Law enforcement, prosecutors and investigating magistrates have to know how to navigate the laws of other countries and be prepared for a lengthy campaign.

• Not all available tools are used to their full potential. Many practitioners simply do not have the specialized training, skills and experience that would permit them to use asset recovery tools effectively, or to choose the appropriate strategy. Informal assistance – or simply talking to colleagues in another jurisdiction directly without formal mutual legal assistance procedures – is rarely utilized to its full potential. The tools in the United Nations Convention against Corruption, signed by 140 states, are also under used.

• Trust is essential, but hard to establish. These are often sensitive, high profile cases, so practitioners need to be able to trust their counterparts and believe that they won’t make inappropriate public statements or inhibit the case for political reasons. Trust, however, takes time to build, especially when one isworking with people from different cultures and legal systems, which are halfway across the world. The reality is that often these cases require urgent action to freeze assets before they can be moved.

• Preventative measures often fail. Anti-money laundering measures that should intercept stolen assets are not fully or effectively implemented. If corrupt leaders and officials never had the chance to deposit stolen assets into a foreign financial system in the first place, there would be no need for recovery!

The obstacles may sound daunting, but we must not lose hope. In recent years, some countries have made asset recovery more of a priority and taken important steps towards overcoming the barriers. To help guide their efforts, our study offers many workable recommendations – many of which are not cost prohibitive – that can be tailored to each jurisdiction’s particular weaknesses.

To start, it is important to give practitioners the tools they need for asset recovery - pass laws that make asset recovery and international cooperation easier, give specialized agencies dedicated resources, and ensure that practitioners and judges get sufficient training. Countries can also use mentoring, networking and other methods of improving communication to create trust, share knowledge and build expertise. To ensure that assets are not dispersed before the asset recovery process can run its course, jurisdictions need to allow assets to be frozen quickly. And governments also need to take steps to ensure that banks fully implement preventive anti-money laundering measures that can intercept stolen assets.

There is clearly room to improve the stolen asset recovery process, which is important as nations rebuild and pursue a course of transparency and economic growth. When jurisdictions work together to overcome the obstacles, stolen assets can be returned to the citizens to whom they rightfully belong.

Comments

Mandatoy Bio-ID in all bank account, lockers, and the property document is the most imortant first step to do any effective recovery property made by corruption, at least in the future http://ittorootoutcorruption.blogspot.com

Thanks for your comments. Bio-ID technology has significantly advanced in recent years. However, it might be a bit cost-prohibitive for developing nations to implement at this time. Some argue identifying the "beneficial owner" is an important first step, but bringing technology closer to helping combat corruption seems like a step in teh right direction.

Very interesting article. I will read the study carefully.
I would suggest that might be time for policy makers to reconsider the effectiveness of the current AML measures. It is time to compare the numbers of the prevention system with those of the repression one and evaluate if big differences are the results of not fully or effectively implemented AML measures or a consequence of their inadequacy.

Dear Fabrizio,
Thanks for the comments! You raise a very interesting piont. I believe their is momentum to start measuring more a country's "effectiveness" of their AML/CFT regime. There are many factors involved in determining "effectiveness" some argue for more "proactive" involvement of law enforcement and less policy focus on "preventive measures." Perhaps a more balanced approach or focus is something policy makers could consider?
Cheers, Kevin

Very interesting. It made me think of certain countries (eg smaller CIS countries) where asset recovery action has been very swift following a change in regime, in spite of inadequate asset recovery laws. The focus of the book seems to be on public assets. Would there be more focus on losses arising between dealings by private persons where corruption is used to disadvantage one party?

Thank you for your comment. You raise another aspect to corruption that should be dealt with. OECD, along with the World Bank and others, are also looking into this aspect of corruption. This study focused primarily on assets stolen by corrupt leaders,their families and associates. It focused on public assets that were stolen or illegally obtained. However, many of the barriers and recommendations are relevant to many aspects of asset recovery, regardless if the funds are public or private assets.

This is a very important move you are taking. I believe the second move is to encourage governments particlular in developing counries to introduce good and serious organs that will enforce repreaval of stolen money. Such instruments ust be composed of persons with intergrity who will not be bribed. Good pay, patriotism with political consciousness that respects the interest of the poor can make a formidable tool against corruption. This should be an independent machine not tied to a ruling body or business. Such a body, at times must have a counter watch body to watch over the main one. It is expensive but not worth the money stolen by political and business thieves.Inactment on laws against corruption are useless if sunctions are not carried out or impeded by politicians, business people and other stakeholders. I wish you good luck and determination to encourage governments and honest men of law to help in this distructive activity. It is the majurity of citizens in all countries that are victims that suffer as a result of corruption

Thanks for your comments! It is an important issue and integrity, patriotism, respect and strong moral fiber are essential characteristics for anyone fighting corruption. The FATF has set standards to combat money laundering that are a great "tool kit" to combat corruption. The FATF Recommendations support the creation of "Financial Intelligence Units (FIU)" that are to be independent and operate autonomously. This is to protect them from undue influence or to be used as a political vehicle. Nevertheless, as you mention, it requires people of strong integrity to work in FIUs in order to track financial intelligence that leads to successful corruption and money laundering prosecutions.